Takeover Defenses and Dilution: A Welfare Analysis

Atreya Chakraborty () and Richard Arnott

Journal of Financial and Quantitative Analysis, 2001, vol. 36, issue 3, 311-334

Abstract: Existing theory suggests that, in an unregulated market for corporate control, the level of takeovers is suboptimal because shareholders do not receive the full benefit from them. However, existing theory neglects that the threat of takeover may divert managerial effort from productive to defensive activities. This paper shows that, when this is considered, takeovers may, in fact, be excessive.

Date: 2001
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